The healthcare industry consists of a wide network of interrelated systems that use a number of complex processes for exchanging information. This network consists of physicians, hospitals, clinics, laboratories, insurance plans, and other ancillary services and plans. These individual components further include individual departments specialized in managing a vast array of patient information. This information often resides in any number of forms and in any number of locations. Thus, a particular exchange between two parties may become a complicated and inefficient process resulting in a substantial waste of resources, time, and money.
The adjudication of healthcare claims is one example of these complicated information exchange processes. This often slow-moving procedure involves two parties, the health plans, e.g., insurance plans, and care delivery organizations (CDOs), e.g. hospitals and physicians, that unfortunately conduct business in a manner that is frequently adverse. Their relationship involves the adjudication of healthcare claims by the health plans and then payment to the CDOs for services rendered.
The adversarial nature of this relationship exists in part due to animosity over the claims attachment process. This process, illustrated generally in FIG. 1, typically starts, as indicated at step 10, when a healthcare claim enters the health plan adjudication process. The health plan then determines, at step 20, whether additional information is necessary to complete the adjudication of the healthcare claim. The decision that the healthcare claim contains all relevant information prompts the health plan to pay the provider, as indicated at step 30. An adverse determination, however, prompts the health plan to send an inquiry, at step 40, to the CDO requesting additional documentation. The CDO must fulfill the inquiry, step 50, by locating, assembling, and forwarding the requested documentation back to the health plan. The health plan continues adjudication, and may repeat this procedure several times for a single healthcare claim. As a result, CDOs may respond to claims attachment inquiries with large amounts of unnecessary documentation in an effort to stave off any additional documentation requests for a specific claim.
This often burdensome response is made worse by the healthcare industry's continued reliance on paper documents and scanned images for fulfilling most attachment requests. This reliance results in substantial administrative costs in connection with resources, adjudication time, and manual labor necessary for processing and responding to the claims attachment inquiries. The federal government responded to these issues by mandating, in the Health Insurance Portability and Accountability Act (HIPAA) of 1996, the use of electronic data interchange standards for the electronic conveyance of healthcare data. This mandate aims to make the process of submitting and adjudicating healthcare claims more efficient by providing a structured set of standardized electronic data to payers. The structured data will lower administrative overhead by reducing the pervasive need for human intervention for reviewing every healthcare claims attachment inquiry. These changes will improve turnaround time and provide a level of predictability. The goal, of course, is to improve the flexibility of the entire system and ultimately lower the cost of delivering healthcare services.
The application of the HIPAA standards to the claims attachment process, discussed previously and illustrated in FIG. 1, is generally illustrated in FIG. 2. As shown, HIPAA mandates the use of standard X12N formats for the exchange of data between the health plans and CDOs. The health plans will request additional documentation using X12N 277 Request for Additional Information (277 Request) transactions. The CDOs receive these transactions and transmit to the health plan a X12N 275 Additional Information in Support of the Healthcare Claim or Encounter (275 Response).
The 275 Response contains the requested documentation in HL7 Clinical Document Architecture (CDA) format. The CDA format allows the exchange of healthcare documents through electronic data interchange networks and software tools by specifying the document structure. The CDA standard includes three variant formats that accommodate manual or auto-adjudication of healthcare claims. The manual adjudication, or “human decision-making,” formats allow scanned images or free-form text to be electronically sent in the 275 Response and reviewed by the person adjudicating the healthcare claim. In contrast, the auto-adjudication, or “computer decision-making,” format contains additional structured information that allows computer-based decision algorithms to extract the content data. The additional information includes Logical Observation Identifier Names and Codes (LOINC) codes, a universal code for identifying and reporting clinical and laboratory observations in HL7 electronic messages.
Adoption of auto-adjudication by health plans and CDOs has been stymied by a lack of comprehensive systems for processing claims attachment inquiries. These entities stand to benefit from computer-based systems that simplify the exchange of information. A simplified data exchange process would lower health plan administrative overhead by reducing human adjudication. This reduction would facilitate the adjudication of claims and ultimately provide more timely payment to CDOs. These benefits, however, could additionally be realized throughout a number of other healthcare systems that rely extensively on information exchange to complete healthcare business transactions.